UK Taxman messes up again

It has emerged that HMRC have made even more mistakes to go hand in hand with their recent PAYE gaffes, this time one that affects tax payers in the highest bracket.

New reports suggest that the now infamous £400 million computer system that is at the heart of the errors is also unable to correctly process the recently introduced 50 percent tax band. The Daily Telegraph claims that the system has not correctly issued PAYE tax codes to people in the upper tax bracket who have more than one source of income, meaning thousands of the UK’s highest earners will have paid the wrong amount of tax.

This could lead to problems for people approaching retirement, if they are found to have paid less than the appropriate amount of tax then they could be hit with an unsightly bill when they least need it. HMRC plans to charge these people in 2012 when they fill out their self-assessment forms.

Apparently HMRC have known about this since the beginning of the year yet they only made a small announcement on their website earlier this month that said: “Because we do not currently have an appropriate 50 per cent tax code to apply to second or multiple employments, if you have employees, directors or pensioners with multiple sources of income then their tax deductions may not be accurate when their various incomes are combined and they become liable to tax at 50 per cent.”

People who could be affected are medical professionals who consult and also work in practices, solicitors who also operate as trustees and accountants with directorships, amongst others.

A spokesman for HMRC said: “We do not have data on how many individuals are in the 50 percent rate band with two or more employments but they will only be a proportion of what is a very small percentage of PAYE customers.”